Tiếng Việt
中文 (中国)
Payroll downsizing or streamlining is a term often referred to by employees working in state agencies. However, many employees still do not understand clearly what the regulations of this regime are as well as the benefits that individuals with downsizing are entitled to. In this article, ASL LAW Firm will specify the regulations on the payroll streamlining regime in Vietnam.
According to the provisions of Decree 108/2014/ND-CP, “payroll” is understood to include staff payroll, civil servant payroll, number of people working in public non-business units, and contract employees assigned by competent authorities in accordance with the law.
“Payroll streamlining” is understood as the assessment, classification, and removal from the payroll of those who are redundant, do not meet the job requirements, are unable to continue to arrange other work arrangements, and settle regimes and policies for those subject to downsizing.
In a more common and familiar understanding, payroll streamlining is the reduction of individuals who are likely to be reduced without affecting or having little effects on the work performance of agencies, organizations, and the unit where the employee works.
Reason for downsizing
According to the provisions of Article 6 of Decree 108/2014/ND-CP amended and supplemented by Decree 113/2018/ND-CP and Decree 143/2020/ND-CP, the cases of downsizing the staff include:
- Cadres, civil servants, public employees who are redundant or do not meet the required professional qualifications, etc.
- Those who work under the regime of indefinite-term labor contracts in administrative agencies and public non-business units have not been given complete autonomy in task performance, finance, organizational structure, and personnel being redundancies due to rearrangement of organizational apparatus and personnel to implement the regime of autonomy and self-responsibility for task performance, finance, organizational structure, and personnel.
- Officials and people working under indefinite-term labor contracts at public non-business units are given complete autonomy in performing tasks, finance, organizational structure, and personnel being redundancies due to organizational reorganization under decisions of competent agencies or due to public non-business units reorganizing their organizational apparatus and personnel to implement the regime of autonomy and self-responsibility for the performance of tasks, finance, organizational structure, and personnel.
- President of the company, member of the Members’ Council, General Director, Deputy General Director, Director, Deputy Director, Chief Accountant, controller of a State-owned one-member limited liability company being redundancies due to equitization, assignment, sale, dissolution, merger, consolidation, division, separation, bankruptcy or transformation into a limited liability company with two or more members or transformation into a unit public service under a decision of a competent state agency; Directors, deputy directors, chief accountants of state-owned agricultural and forestry farms, which are redundant due to the rearrangement according to the provisions of Decree 170/2004/ND-CP, Decree 200/2004/ND-CP.
- People who are cadres and civil servants who are appointed by competent agencies to participate in the management or as authorized representatives for the portion of state capital in an enterprise with state capital that is surplus due to the restructuring of such enterprise.
- The people working on the payroll are assigned by the competent state agency to the associations on the redundant list due to the reorganization of the organization according to the decision of the competent authority.
- Those who are already cadres, civil servants and public employees who are assigned by competent agencies to work at associations that are assigned payroll and the state budget provides financial support to pay salaries.
In addition, the most common reason for downsizing is because cadres, civil servants, and public employees do not have enough health for a certain period of time.
According to the provisions of Clause 1, Article 1 of Decree 143/2020/ND-CP, cadres, civil servants and public employees who take sick leave beyond the maximum time prescribed by law in one of the following two cases will be subject to payroll streamlining:
– Having 02 consecutive years at the time of consideration for payroll streamlining and in each year, the total number of days off work is equal to or higher than the maximum number of sick days specified in Clause 1, Article 26 of the Law on Social Insurance 2014, certified by the medical examination facility and by the Social Insurance agency that pays the sickness allowance in accordance with the law.
– In the preceding year at the time of consideration for payroll streamlining, the total number of days off work is equal to or higher than the maximum number of days off due to illness as prescribed in Clause 1, Article 26 of the Law on Social Insurance 2014, with confirmation from medical examination and treatment establishments and from the Social Insurance agency for payment of sickness benefits, and individuals voluntarily being subject to payroll streamlining and are approved by the agency or unit directly managing them.
The regime for employees subject to payroll streamlining
Pursuant to Decree 108/2014/ND-CP, employees subject to payroll streamlining will have 4 support policies including:
- Early retirement policy;
- Policy on switching to work at organizations without regular salary from the state budget;
- Severance policy;
- Policy for those who quit a leadership position or are appointed or elected to another position with a lower allowance for the new leadership position due to arrangement and organization.
The above policies are respectively prescribed in Articles 8, 9, 10, and 11 of Decree 108/2014/ND-CP.
Early retirement policy
According to Article 8 of Decree 108/2014/ND-CP, the subject of payroll streamlining specified in Article 6 of Decree 108, if over 58 years old to under 60 years old for men, over 53 years old to under 55 years old for women, and have paid social insurance premiums for full 20 years or more are entitled to the retirement regime in accordance with the law on social insurance and shall not be deducted the pension rate due to premature retirement.
Different cases with other criteria for enjoying benefits for each year of early retirement, or without deduction of the pension rate due to early retirement, etc. are specified in more detail in Article 8.
Policy on switching to work at organizations without regular salary from the state budget
According to Article 9 of Decree 108/2014/ND-CP, those who are subject to downsizing specified in Article 6 of Decree 108, move to work at organizations that do not receive regular funding from the state budget are entitled to benefits including:
a) Allowance for 03 months of current salary;
b) An allowance of 1/2 month’s salary for each year of work with social insurance premiums.
However, employees should note that this policy will not apply to:
- Those who have worked at a public non-business unit when the unit is transformed into a public non-business unit that can self-finance recurrent expenses or a public non-business unit to self-finance recurrent and investment expenses or business enterprises or equitization are still kept working;
- Persons subject to downsizing of payrolls whose age is full 3 years lower than the minimum retirement age specified in Clause 3, Article 169 of the Labor Code 2019, having full 15 years of occupation or heavy work or having full 15 years of working in areas with extremely difficult socio-economic conditions, including working time in places with a regional allowance coefficient of 0.7 or more;
- Persons subject to payroll streamlining whose age is full 3 years lower than the retirement age specified in Clause 2, Article 169 of the Labor Code 2019, have full 20 years of paying social insurance premiums or more.
Severance policy
The subject of payroll downsizing has a maximum age, 2 years lower than the minimum retirement age specified in Clause 3, Article 169 of the Labor Code and is ineligible to enjoy the policy of early retirement together with the downsizing subject whose age is 2 years younger than the retirement age specified in Clause 2, Article 169 of the Labor Code and are ineligible for the early retirement policy will receive benefits including:
- 03 months of current salary to find a job;
- 1.5 months salary for each year of service with social insurance contributions.
Policy for those who resign from a leadership position or are appointed or elected to another position with a lower allowance for the new leadership position due to organizational arrangement
Cadres, civil servants, and public employees who, due to organizational arrangement, cease to hold a leadership position or are appointed or elected to a new position with a leadership position allowance lower than that of the current leadership position allowance, may reserve the allowance for the leadership position being enjoyed until the end of the term of holding the appointed position or the end of the election term.
Those who have held positions according to the appointed term or the election term have less than 6 months remaining, they shall be reserved for 6 months.
ASL LAW is the top-tier Vietnam law firm for Employment and Labor Law. If you need any advice, please contact us for further information or collaboration.
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